Wednesday, May 14, 2014

Lenders should share risks with borrowers.

A new book (“House of Debt”) advocates the above. I trust the authors are aware that their idea is not original. That is, the above risk sharing is inherent to full reserve banking (aka 100% reserve banking). Plus of course the idea is inherent to Islamic banking. But doubtless Mohammed’s reasons for pushing the idea were somewhat different to the reasons invoked by today’s advocates of full reserve.